Bets on U.S. data help UK miners to outperform; FTSE steady

Fri Feb 7, 2014 8:01am EST

* UK mining shares outperform broader market

* FTSE 100 steady after sharp gains on Thursday

* Shire weakens on trial failures

By Tricia Wright

LONDON, Feb 7 (Reuters) - London-listed mining stocks rose for a fourth straight session on Friday, reaching a two-week high, as investors bet that strong U.S. jobs data will improve sentiment and boost demand for raw materials.

The UK mining index was up 0.6 percent by 1235 GMT, outperforming the blue-chip FTSE 100 index, which rose 10.52 points, or 0.2 percent, to 6,568.80 points. The FTSE 100 had jumped 1.6 percent the day before to record its best daily gain in seven months.

"Today's market is driven by speculative positioning ahead of the U.S. numbers," said Tim Whitehead, investment manager at Redmayne-Bentley. "If you want to take a stance on the market and go into the higher beta sectors like miners and your call is right, you will get twice the return on the general level of the index."

Some investors are betting that U.S. non-farm payrolls numbers, due at 1330 GMT, will also be encouraging after data showed on Thursday the number of Americans filing new claims for unemployment benefits fell more than expected last week.

According to a Reuters Survey of economists, U.S. jobs are expected to have increased by 185,000 last month. If the data comes in line or better that predictions, it would offer some assurance to investors that the pace of economic recovery in the world's biggest economy is not faltering and global demand for metals will improve.

The UK mining sector is headed for its second straight week of gains. The index is up 1 percent for the year after falling 16 percent in 2013. In contrast, the FTSE 100 is down around 3 percent so far in 2014 after surging 14 percent last year.

Sweetener maker Tate & Lyle advanced 1.8 percent, among the top FTSE 100 risers. Traders cited a double upgrade by JPMorgan, to "overweight" from "underweight", as the catalyst for the move.

Shire fell 0.9 percent in brisk trade after Vyvanse, a top-selling medicine for hyperactivity, failed in two late-stage clinical trials to successfully treat adults with major depressive disorders.

"I think it should go down more; it's obviously a blow to the company... I think you'll see a quite negative pull-back to 28 quid," said Joe Rundle, head of trading at ETX Capital.

"If there's a big sell-off in the stock (to 28 pounds) bid speculation will come back... into play in a more serious manner," he said. Such a drop would take the shares some 10 percent below the current 3,113 pence level.

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